How personalization is transforming the media industry
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From personalized content to ‘advicetising’, personalization is revolutionizing the way users consume content and how media companies monetize it.
Every day we create 2.5 quintillion bytes of data¹ and upload 300 million photos to Facebook.² Every minute we upload 300 hours of video to YouTube.³ Having great content is no longer enough to stand out amid this overload of information that Internet users face. In this article, we look at how media enterprises can get consumers to engage with their content and advertising through personalization and contextualization.
Personalization and contextualization is one of three themes that we believe will be central to the digitization of the media and entertainment industry over the next decade. The other themes we examine are content fragmentation, and partnerships and industrialization.
Personalized advertising
Personalized advertising is becoming increasingly important as traditional advertising is becoming less effective at engaging consumers, especially younger ones. Ad clutter on desktop and mobile browsers is creating bad user experiences, damaging brands and encouraging users to turn to ad-blocking software. The negative impact of digital advertising on user experience seems to be the real price of free content.
Instead, brands need to be smart and embrace ‘enhanced pull advertising’. They need to apply creativity and innovation in communicating a product or brand’s value proposition without actually advertising it, through content marketing, word-of-mouth referrals, customer relationship management, and sales promotions and discounts. An enhanced version of this includes use of branded content marketing to entertain consumers, entice participation with the content, use of expert reviews, articles of bloggers and other strategies to foster conversations around a product.
Case study
InMobi
InMobi, an Indian company, specializes in offering customized adverts on mobile platforms, a task that is made more difficult by users finding mobile ads particularly intrusive. With its Miip platform, launched in July 2015, it can embed adverts in 40,000 apps and allow users to buy the advertised product without leaving the app they are using.⁴ InMobi has more than 10% of the market for mobile advertising with 50 billion advertising impressions every month, leading some to value the company at up to $2 billion.⁵
Personalized content
The amount of new content published every week would take longer than a human lifetime to consume. In this cluttered digital space, consumers need a trusted filter or personal guide that can separate the signal from the noise and deliver personal recommendations to the user.
Contextual information is very important here, as the user can have very different tastes or needs depending on the time of day, where they are and what they are doing. Above all, the recommendations need to be presented elegantly in a clean, seamless user interface.
The media enterprises that have the biggest opportunity to benefit from offering personalized content will be content aggregators, which can encourage users to spend more time on their platforms through enhanced recommendations of related content. Perhaps the most significant test for the firms that create recommendation engines will be to win and retain consumers’ trust, and convince them that they are receiving unbiased information and recommendations. However, as consumers’ tastes and preferences are prone to change, recommendation systems have the potential to enrich the cultural life of consumers by encouraging the discovery of new content and information.
Case study
Pandora
Some companies are already moving toward offering personalized content. Pandora, a freemium music-streaming service, gives users recommendations based on their listening habits. Each song is analyzed for up to 450 characteristics that have a bearing on user preferences, resulting in a uniquely customized experience for each listener. The effectiveness of the recommendations have contributed to the growth of Pandora’s user base to more than 200 million people and its revenue to just under $1 billion in 2014.⁶
Data privacy and transparency reform
Catastrophic breaches of data security happen all too frequently. In recent years, personal data from tens of millions of consumers has been compromised in separate incidents (see Figure 1).
According to Accenture, 54% of digital consumers are cautious about the information they share due to lack of confidence in the online security that protects their personal data. As Internet businesses become increasingly global, their attractiveness as targets for hackers and criminals increases, raising the likelihood of further data leaks in the future without significant improvements in data security.
In tandem with these concerns over data security, regulators have started to take a more aggressive approach to the technology sector. Most notably, the European Commission is taking on Google in a regulatory battle over its dominance of the Internet search and mobile operating systems markets, and investigating whether it is presenting search results independently of its own commercial interests.⁷ As a consequence of consumer concerns and regulatory pressure, media companies are moving toward communicating more transparently with their customers about how their data will be used. Responsible companies are already restricting the ways in which they will monetize that data.
Case study
Datacoup
Datacoup is a New York-based startup that enables users to monetize their own data without passing personal information to advertisers. It promises users who sign up the possibility of earning up to $8 a month in return for access to their social media accounts and data about the online payments they make. Datacoup is eventually looking to sell anonymized data profiles to marketers but, to succeed, it faces the challenge of signing up a large enough user base to attract interest from advertisers.⁸
‘Phygital’: Digital media becomes physical
The rapid growth of the Internet of Things, which is predicted to double in size from 2015 to 2020,⁹ has enabled digital media to become integrated in the physical world. This development has been most noticeable in two areas: retail and live events.
Media and retail are merging, particularly through advances in connected retail. Digital signage, beacons and Digital out of Home technologies are providing consumers with an entirely different retail experience. While walking around a shop, they can now be given relevant, tailored content, such as videos, offers and specials. It’s been forecast that by 2016, connected retail will influence 44% of retail sales. Live events also have the potential to be transformed, as arenas and venues become connected and media starts to flow inside. The ‘connected stadium’ experience allows fans’ experience of a sports event or concert to be augmented through the availability of replays, special interviews or alerts about merchandise and refreshment deals on their smartphones.
Case study
NFL and Verizon
For the 2015 Super Bowl, the NFL, in partnership with Verizon, launched the Super Bowl Stadium App, which allowed fans to watch instant replays from four different camera angles on their phones and even catch the famous half-time commercials. Using geofencing beacons, the app is designed to only work inside the stadium itself.¹⁰ In-stadium apps have the potential for sports teams and event promoters to start a conversation with fans and, further down the line, encourage them to buy merchandising, subscriptions to online content or tickets to future events. >
Advicetising: Advertising as personal advice
Traditional advertising is becoming less effective as Internet users react negatively to generic adverts that disrupt their online activity. Marketers are now finding it more effective to provide users with useful, personalized information or advice, while also implicitly or explicitly promoting a brand, product or service. Thanks to advances in data analytics and machine learning, marketers are becoming better at framing these advicetisements but by no means have perfected this technique. Missteps with targeting communications can prove costly to a brand’s reputation as consumers are particularly sensitive to concerns that a company might be exploiting their personal data or manipulating their emotions for commercial gain.
Case study
Google Now
The advicetisements that succeed best are the ones that provide the user with genuinely useful information or a helpful service. Examples include Google Now, an intelligent personal assistant similar to Apple’s Siri, which helps users with queries expressed in natural speech. It provides alerts and reminders based on the consumer’s location and past activity, and also arranges information from user’s Gmail accounts, such as flight and hotel details, into cards that are easy to access.¹¹ In this way, Google Now provides a helpful service for users while strengthening their connection to the Google brand. >
Footnotes
1. http://www-01.ibm.com/software/data/bigdata/what-is-big-data.html
2. https://zephoria.com/top-15-valuable-facebook-statistics/
3. https://www.youtube.com/yt/press/en-GB/statistics.html
4. http://timesofindia.indiatimes.com/tech/tech-news/InMobi-takes-its-fight-to-Google-Facebooks-home-ground/articleshow/48080917.cms http://www.inmobi.com/company/press/inmobi-says-no-to-traditional-mobile-ads/
5. http://bits.blogs.nytimes.com/2015/03/11/inmobi-plans-to-stay-independent-dismissing-rumors-of-talks-with-google/?_r=0
6. http://www.forbes.com/sites/maggiemcgrath/2015/02/05/pandora-plummeting-more-than-20-on-revenue-miss/
7. http://europa.eu/rapid/press-release_IP-15-4780_en.htm
8. https://datacoup.com/docs#how-it-works http://www.technologyreview.com/news/524621/sell-your-personal-data-for-8-a-month/
9. https://www.cisco.com/web/about/ac79/docs/innov/IoT_IBSG_0411FINAL.pdf
10. http://mashable.com/2015/01/26/nfl-super-bowl-stadium-app/
11. http://www.google.com/landing/now/#cards
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Media is one of six industries (along with automotive, consumer, electricity, healthcare, and logistics) that have been the focus of the World Economic Forum’s Digital Transformation of Industries (DTI) 2016 project. An overview of the DTI program can be found here.
Our in-depth findings about the digital transformation of the media and entertainment industries are available in a white paper, which can be downloaded here.
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